If a natural monopoly is allowed to set its price above its average total cost, then
A) the company makes an economic profit.
B) the company incurs an economic loss.
C) competitors will enter the market.
D) the company will produce more than the efficient amount of output.

Question

Quizplus · Accepted Answer

If a natural monopoly sets its price above its average total cost, it will make an economic profit because it is charging more than the cost of producing the goods or services.

If a Natural Monopoly Is Allowed to Set Its Price